Market watch: Winning streak ends as stocks fall prey to political instability

Benchmark index loses 571.99 points to settle at 42,775.04

KARACHI: The continuing political noise dampened investors’ interest on Thursday, ending a seven-day winning streak, after an accountability court issued arrest warrants for Finance Minister Ishaq Dar and ordered the Punjab government to release judicial report of the Model Town incident.

The KSE-100 index started to retreat right from the opening session and fell below 43,000 points around midday, despite a brief recovery.

At close, the benchmark KSE 100-share Index recorded a fall of 571.99 points or 1.32% to stand at 42,775.04.

According to Elixir Securities, Pakistan equities closed negative after the benchmark index ended a seven-day positive run by dropping 1.3% to settle above 42,700.

“Domestic political noise mainly triggered anxiety among investors after an accountability court not only froze assets and issued arrest warrants for Finance Minister Ishaq Dar, but also ordered the Punjab government to make the judicial report of Model Town incident public,” Elixir said.

Consequently, the wider market remained in the red throughout the day and the KSE-100 even dropped below the 43,000-point psychological barrier in the final hour of trading due to institutional selling in index-heavy names.



“Concerns over domestic politics and macroeconomic condition will continue to dampen sentiments in the near term while institutional flows primarily from foreign investors will remain crucial in the days ahead in bringing the market out of its current bearish phase,” the report added.

JS Global analyst Maaz Mulla said the market remained in a bearish mode throughout the day with the benchmark index closing 572 points (1.32%) down at 42,775 points.

"Volumes deteriorated by 26%, standing at 166 million shares compared to 223 million in the previous trading session. K-Electric (+1.30%) was the volume leader for the day with 13 million shares of the power company changing hands," Mulla said.

Negativity emerged in the market after the Lahore High Court ordered provincial authorities to release the Model Town incident report. Many heavyweights from the banking sector including Habib Bank (-2%), MCB Bank (-3%) and United Bank (-1.50%) contributed to the negativity in the overall market.

Nishat Power announced its fiscal year 2016-17 results, recording earnings per share of Rs8.15 and declaring final cash pay-out of Rs2 per share. Pakistan Oilfields (-1.72%) and Pakistan Petroleum (-1.26%) from the oil and gas exploration and production sector closed in the red zone.



The fertiliser sector closed (-1.72%) lower as Fauji Fertilizer Bin Qasim (-3.67%), Engro Fertilizers (-2.19%) and Fauji Fertilizer Company (-0.43%) closed negative.

"Moving forward, we expect similar bearish trend to continue unless clarity emerges over the political scenario or positive triggers erupt on the economic front. We recommend investors to remain cautious and sell on strength," he added.

Overall, trading volumes fell to 165 million shares compared with Wednesday’s tally of 222 million.

Shares of 402 companies were traded. At the end of the day, 90 stocks closed higher, 279 declined while 33 remained unchanged. The value of shares traded during the day was Rs8.7 billion.

K-Electric was the volume leader with 12.5 million shares, gaining Rs0.08 to close at Rs6.24. It was followed by Sui Southern Gas Company with 11.2 million shares, losing Rs0.07 to close at Rs38.52 and Engro Polymers with 9.9 million shares, gaining Rs0.54 to close at Rs33.01.

Foreign institutional investors were net sellers of Rs168 million during the trading session, according to data compiled by the National Clearing Company of Pakistan Limited.